By Bharat Gautam

(Reuters) – Gold prices dropped Wednesday due to a consolidation of the dollar at its highest point in over two years. This pressured demand greenback-priced bullion.

It was at $1.898.48 a pound, down 0.4% as of 0353 GMT. The U.S. lost 0.3% to $1.899.00

Matt Simpson, senior market analyst for City Index said that $1,900 would be a crucial level today’s session. “But, looking further out it doesn’t look ideal right now with the U.S.$ at a 25 month high,” Matt Simpson of trading company City Index stated.

Dollar stood at its highest point since early pandemic days and was headed for its best month ever. This is due to the possibility of U.S. rate increases and safe-haven flows that were fueled by slower growth in China, Europe and the United States. [USD/]

Greenback-priced greenback gold is less appealing to other currency holders if the dollar is stronger. The greenback also serves as a safe-haven alternative to gold in times of political and economic crisis.

Although headlines in Russia gave gold some support on Tuesday as investors searched for safe havens, Simpson noted that the Ukraine crisis is not as bullish a story as it used to be and won’t last the week.

According to data from European Union’s network of gas transmission operator, Russia stopped gas supply to Poland on Wednesday under the Yamal contract. This was in response to Russia’s conflict with Ukraine.

As investors became more concerned about the state of the world’s economy, they began to sell their riskier assets to make way for safer investments like government bonds and the dollar. [MKTS/GLOB]

Spot gold rose 0.1%, to $23.51/ounce. Platinum dropped 0.1%, to $920.02; palladium firmed 0.6%, to $2,198.48.